- Better Drugs Sooner at Lower Cost - March 8, 2018
- In Defense of Free to Choose Medicine - September 21, 2017
- Trump’s FDA Pick Should Let Patients Be Free to Choose Medicine - March 18, 2017
Free To Choose Medicine, delivered at the Conservative Political Action Conference (CPAC) in February 2018. Watch in the video player above, or read on:
In order to live longer, healthier, and more productive lives, we need a high-performance drugs-to-patients system. The goal of that system should be better drugs sooner at lower cost.
We are failing to achieve that goal. One obvious bit of evidence is sky-high prescription drug prices, especially for serious illnesses.
To fix the system, we need to fix the key constraint, or the bottleneck, in the system: the FDA’s monopoly on access to new drugs and the FDA’s relentless, continual demand for extremely expensive—in terms of both time and money—clinical trials.
Less visible in this process are the patients who pay the ultimate cost after being denied access to a not-yet-approved drug that has real potential to extend their lives or even save their lives.
Let’s talk a little bit about those patients.
It’s for the Patients
A slide in my presentation shows 11 patients who died from cancer. Before their deaths, they all tried to get a not-yet-approved drug that had genuine potential to extend or save their lives. The girl in the middle of the slide is Abigail Burroughs, the daughter of a very good friend of mine, Frank Burroughs. Abigail died at 21. She was valedictorian of her high school class and had an amazing future. Frank tried to get her into a clinical trial for a drug, Erbitux, which was subsequently approved but too late for Abigail. The first time they tried to get into the trial Abigail’s cancer was deemed to be in the wrong part of her body. The second time, they said she was too sick to enter the trial.
What we’re talking about here is not a modest, incremental reform of the FDA. We’re talking about a human tragedy that needs to be eliminated.
After Abigail died, Frank decided to devote his life to fighting for patients. Frank formed the Abigail Alliance for Better Access to Developmental Drugs.
Now, sometimes there’s an unspoken assumption in the room, especially if the room has strong FDA proponents for the status quo. That assumption is that you and I are not smart enough to work with our doctors and make an informed decision about the use of a not-yet-approved drug. That is simply false.
The Abigail Alliance in the past 16 years fought for access to 40 drugs using partial information—not the type of comprehensive information that Free To Choose Medicine would bring. Forty out of 40 drugs were subsequently approved by the FDA. So I think we’re smart enough to deal with our own health decisions.
Sound, Principled, Practical
The third edition of my Free To Choose Medicine book has a foreword from Vernon Smith, the economist who won the Nobel Prize partly for his work in deregulating markets. He said:
Free To Choose Medicine is a system to promote decentralized responses close to the local knowledge that is available to physicians and their patients but not to the FDA.
In other words, Free To Choose Medicine is based on sound economic principles, and it is a practical plan to achieve better drugs sooner at lower cost.
As to practicality, about ten years ago there was an early version of Free To Choose Medicine—at time we called it Dual Tracking—and The Heartland Institute published a booklet about it. That booklet was translated into seven foreign languages, one of which was Japanese. Japanese for Tax Reform, a free-market think tank in Japan, translated the booklet and gave a copy to each and every member of Japan’s governing body.
In November 2013, the equivalent of Free To Choose Medicine was passed in Japan. It’s for regenerative medicine drugs only, but it’s a major beachhead in the whole freedom of choice movement.
What do you think is happening in Japan? Right now there are six or eight regenerative medicine drugs, many of which are stem cell treatment drugs, accessible to Japanese individuals. Those drugs have generated safety evidence and some likelihood of efficacy. If you are a drug developer in stem cells, anywhere in the world, you want to get yourself over to Japan. Capital is flowing in a major way to Japan.
Did the Japanese make a scientific breakthrough in stem cell treatments? No. They made a regulatory breakthrough.
I don’t know how important the booklet was. But the important thing is this: The train has left the station as far as freedom of choice goes.
Key Component #1: Free To Choose Track
There are three key components of Free To Choose Medicine. The first is a Free To Choose track operated independently of the FDA.
Under the current system, after preclinical work, a drug selected for clinical trials goes through Phase I, which is a safety trial. Then it gets into Phase II, safety and efficacy. Then Phase III, typically randomized controlled trials. At that point, if the data are good enough, the developer applies for a New Drug Application. This process will take about ten to 12 years and cost approximately $2.5 billion. That includes the cost of failed drugs and the capital cost involved.
Think of this as a pipeline. What’s coming out of the pipeline after 10 or 12 years is an approved drug. We all know that medical innovation is growing at an exponential rate, in terms of understanding of biology and the human genome. The drugs that are currently in the early part of this pipeline will make currently approved drugs obsolete. Wouldn’t it be nice to have freedom of choice, so you could access these most innovative new treatments much earlier?
The Free To Choose track would work like this: After a drug has successfully passed Phase I safety trials and one or more Phase II trials, a drug developer could petition the Free To Choose Medicine Advisory Committee to sell the drug on the Free To Choose track, operated independently of the FDA. That is very important. This is a market-based system. Treatment results from people using the Free To Choose drug will be available to you and your doctor. If that drug does better than approved drugs, use would accelerate. If that drug does poorly, use would drop off. It’s a market-based system.
If Free To Choose is the new environment, we should expect new businesses to start exploiting this new environment. In the Netherlands there’s a company called MyTomorrows. The CEO is Ron Brus. Previously he started up a biotech company and sold it to Johnson & Johnson for $2.4 billion. Ron’s a very smart, very capable guy.
I asked him about MyTomrrows. He explained his father was diagnosed with Stage II lung cancer. There’s a drug out there which everyone agrees is the best treatment, but it’s not yet approved. Ron was the CEO of a biotech company, but he could not get that drug for his father before he died.
MyTomrrows acts as a middle man, not in the United States but in many countries. It deals with patients, drug developers, and drug manufacturers. It handles all the paperwork for getting access to drugs before they are approved by the official government agencies. This quote from Ron Brus hits the nail on the head about what Free To Choose Medicine is all about:
There is only one reason why a good drug is expensive: the 15 years taken to develop it. The molecule itself is not expensive. If we continue down the current route, the process will only become more expensive. But if we introduce drugs earlier to the first patient, they will become cheaper and more patients will benefit. Introducing a drug to a surrogate market earlier will also create more competition, thus bringing down costs and encouraging new drugs. Actors who benefit from the current system do not want change. But patients will ultimately win, as they are the consumers. Health care is consumerizing so rapidly today, that for the first time patients truly understand what the process of drug development entails. The Internet and social media have helped patients enormously in terms of accessing information. Finally, society’s growing access to data changes the world and the pharma industry should not be the exception.
Key Component #2: Evaluation
The second key component is a Tradeoff Evaluation Drug Database, nicknamed TEDD. TEDD would contain clinical trial results for approved drugs plus up-to-date treatment results for not-yet approved drugs that are on the Free To Choose track. You and your doctor would be able to access it online.
This is a self-adjusting system. As the data are being reported in real time, the treatment results would include genetic makeup and biomarkers. You and your doctor would be able to discover that subsets of patients, identified typically with their genetic makeup, could do extraordinarily well or poorly with the Free To Choose drug. That is incredibly valuable information, especially if you’re a member of one of those subsets. All of this is happening in real time, very fast, entirely different than the current system.
TEDD would be a treasure trove of information for the pharmaceutical industry to make better R&D decisions. Oftentimes we hear that what we really want is radical out-of-the-box innovation, not me-too drugs that barely change the standard of care.
Consider the classic small biotech company. They’ve got all the scientific talent in the world, and they’ve come up with a radical, out-of-the-box, different way of approaching Alzheimer’s. They try to raise capital. What does the venture capitalist see? Ten to 12 years from now, after I give you my money, we will find out what kind of statistical milestones the FDA will demand for this radical, out-of-the-box innovation. We know the FDA is overly cautious all the time, so if something is truly innovative, the FDA is going to demand incredibly difficult milestones.
As a venture capitalist, I may like your science, but the business risk of this long regulatory overload is just too much. So the cost of capital is enormously high for the most innovative companies that we want capital to flow to.
The current commissioner of the FDA, Dr. Scott Gottlieb, is a really smart guy. He gets it. Let me read a brief quote about cost of capital from Scott Gottlieb:
The cost of capital is affected the most by the risk of failure. As the risk of failure grows, entrepreneurs seek a higher potential return in order to support the initial investment. The cost of capital is also significantly impacted by the time it will take to develop a new medicine. In a dynamic and competitive market, the capital needed to fund a new drug program is always competing against the next best economic use of that money.
Free To Choose Medicine would dramatically lower the cost of capital for smaller developmental companies. Instead of ten to 12 years, after approximately three or four years, if their drug works, if the science works, they would generate data showing that actual real-world patients are getting better with this drug. That would solve their capital problem.
Key Component #3: Observational Approval
The third leg of the stool is Observational Approval. TEDD would deal with observational data: safety and efficacy results from a heterogeneous sample of real-world patients using a drug. The Free To Choose Medicine bill would empower the FDA to grant an alternative approval if the observational data are compelling. That would be a big carrot to get drug developers to participate in the Free To Choose track. It also would be an incentive for insurance companies to reimburse for the use of these Free To Chose drugs.
Freedom of Choice
Let me summarize what we’re talking about here: It’s freedom of choice.
Free to Choose Medicine increases choice, decreases regulatory costs, increases innovation, and increases competition—not just competition for the FDA’s regulatory process, but heightened competition for the pharmaceutical companies. And the result would be a decline in drug prices.
With Free To Choose Medicine, we can achieve our ultimate goal: better drugs sooner, at lower cost.